Providing Fair Financial Products for the 56% of the US Without Access to Them – Jake Rosenberg of LendUp

Jake Rosenberg is the cofounder and CTO of LendUp (W12). They provide access to quality credit cards and loans without hidden fees or debt traps. Their customers are the 56% of Americans that have what is described as a “subprime” credit score, meaning they can’t be approved for credit by most banks.

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Transcript

Craig Cannon [00:00] – Hey, how’s it going? This is Craig Cannon, and you’re listening to Y Combinator’s podcast. Today’s episode is with Jake Rosenberg and Ali Rowghani. Jake’s the cofounder and CTO of LendUp, which was in the Winter 2012 batch. And their customers are the 56% of Americans that have what is described as a subprime credit score, and that basically means they can’t get approved for credit at most banks. And Ali, who you’ve probably heard on the podcast before, is the CEO of YC Continuity. All right, here we go.

Ali Rowghani [00:29] – Jake, really awesome to have you. Thanks for…

Jake Rosenberg [00:33] – Yeah, excited to be here.

Ali Rowghani [00:33] – Thanks for coming back to YC, and spending some time with us, and spending some time on the mic.

Jake Rosenberg [00:37] – Absolutely.

Ali Rowghani [00:38] – Cool. I wanted to ask you a few questions about yourself, first of all, you’ve got a really cool background. You got started in this industry a long time ago.

Jake Rosenberg [00:47] – Yeah.

Ali Rowghani [00:48] – As a youngster, and have been at some interesting companies. tell us how you kind of got involved in tech, and where you’ve been, and how you’re today at LendUp.

Jake Rosenberg [00:56] – Yeah, absolutely. I grew up in the Bay area, so I was here during the first dot com boom, and when I was a teenager I was really interested in tech, in two main areas actually. Messing around with computers and video production.

Ali Rowghani [01:15] – Mmm-hmm.

Jake Rosenberg [01:16] – And so the two companies that I really wanted to work for when I was a teenager and that I applied to summer internships for, that I really was excited about were Yahoo and Pixar, which, you know, obviously, your background in Pixar.

Ali Rowghani [01:26] – Yeah, that place isn’t bad.

Jake Rosenberg [01:27] – Yeah, it’s a pretty awesome place. And Yahoo ended up contacting me about a summer internship, during high school…

Ali Rowghani [01:34] – Pixar did not?

Jake Rosenberg [01:35] – I’m still waiting to here back, so I’m hoping you can help me there.

Ali Rowghani [01:37] – You’re in.

Jake Rosenberg [01:38] – Okay, alright. I was in high school, I was 16, and I was looking for a summer internship, and Yahoo ended up contacting me about being a production intern, just coming in and doing anything they needed, so I went in and interviewed. My mom actually drove me to the interview ’cause I was 15 and a half. I had my learner’s permit, but I didn’t have my license yet. By the time I would get the job, I would have my license. My mom drove me and then waited outside while I interviewed with some of the early people at Yahoo. They were about, at the time they were 65ish people, and so…

Ali Rowghani [02:11] – Still private?

Jake Rosenberg [02:12] – Still, they were, when I interviewed they were still private. By the time I interviewed that summer, which was the summer of ’96, they had gone public. With like 80 people and 1.6 million in revenue.

Jake Rosenberg [02:25] – So it was a different…

Ali Rowghani [02:26] – Different time.

Jake Rosenberg [02:27] – A different time. I ended up being a production intern that summer, and worked on cold calling to try to get listings for Yahoo classifieds, cold calling car dealerships and getting them to export their cars in Excel and stuff like that. And then writing perl scripts to like munge the data and load it into our database, so immediately got just thrilled and excited about what was going on with tech and with the web, and wanted to be a part of it, and sort of took off from there and never looked back, so went back to Yahoo the next few summers as I graduated from college, with a degree in CS. And then went and joined full time and was there for about eight years, building a bunch of different products, eventually working my way up to a more senior sort of architecture position there. And then, after that I moved on to Zynga, where a friend of mine who was a project manager was building out a team that was building infrastructure for all the games. It was building out shared messaging and communications infrastructure for the scale of FarmVille plus CityVille plus Mafia Wars plus Words with Friends, so doing a lot of user-to-user messaging and the gifting system and email system and things like that, really fun as an engineer to work on very, very high throughput, high volume applications and really enjoyed that. Was there for a couple years through the IPO, and then started on LendUp. My brother Sasha and I embarked on that journey.

Ali Rowghani [03:58] – Great. So tell me, so you’d been an engineer at startups and seen two amazing companies scale.

Jake Rosenberg [04:02] – Yep.

Ali Rowghani [04:03] – You saw one IPO inside the company and obviously Yahoo was kind of a legendary company for a long time and still a big company today. What sort of told you, “Hey, it’s time to start a company?” Was that something you always wanted to do or did Sasha convince you to do it?

Jake Rosenberg [04:17] – Yeah.

Ali Rowghani [04:18] – Tell us that.

Jake Rosenberg [04:19] – A little of both. I always was interested conceptually in doing it.

Ali Rowghani [04:23] – Yeah.

Jake Rosenberg [04:24] – But I was never actually steeped in startup culture. Even growing up here, I was at a what became very rapidly a big company. By the time I joined Zynga they were 300 something people, so never really was, you know, I was a big fan of Paul Graham and his essays, but never really got into following startup culture, and so was never sort of reading blogs about how to be an entrepreneur or anything like that. I was pretty focused on the technical craft, and improving my technical skills. And, so when Sasha sort of came to me with his ideas around what we could do to reinvent financial services with technology, I got pretty excited by it. I got pretty excited by the impact potential, by the technical challenges involved. But it was definitely a little bit of a leap of faith. It was not something where, I was a little bit used to being at companies that had a little more structure, had a little bit of a safety net.

Ali Rowghani [05:19] – Yep.

Jake Rosenberg [05:20] – And so I knew it was something I had always thought about and wanted to do, but it was definitely a little nerveracking…

Ali Rowghani [05:27] – Right.

Jake Rosenberg [05:28] – To make that leap, for sure.

Ali Rowghani [05:27] – Right. One of the things among many things that’s special about LendUp is the strong mission… The sense of purpose that you guys have. Can you talk about that, and talk about, you know, how that pervades the culture of the company and the types of people that work there?

Jake Rosenberg [05:42] – Yeah, absolutely, and I mean that was the thing that eventually did encourage me to make that leap. Financial services has such an incredible impact on so many people and by making small improvements to some of these products, you can really impact people’s lives in a very positive way. Especially in the parts of the market that are underserved or poorly served.

Ali Rowghani [06:08] – Which is huge, right?

Jake Rosenberg [06:09] – Huge.

Ali Rowghani [06:10] – Describe that for the audience.

Jake Rosenberg [06:13] – For context, so LendUp is essentially a company that is creating socially responsible financial services products online, focused on the 56% of the United States that doesn’t have access to prime banking and credit services. Yhat means there’s essentially since 2008 there’s been a huge move, based on a number of different factors in the market and regulation, that have created a lot of financial exclusion. That have basically meant that there are a lot of people who don’t have access to traditional credit products.

Jake Rosenberg [06:47] – And LendUp is trying to fill that gap by offering personal loans and credit cards and continuing to build more products as we build out a whole ecosystem…

Ali Rowghani [06:55] – Right.

Jake Rosenberg [06:56] – For that group.

Ali Rowghani [06:55] – Right.

Jake Rosenberg [06:58] – And these are people who have, you know, potentially poor credit history and don’t have access to banks and credit unions, and… Therefore need alternative products.

Ali Rowghani [07:08] – Right, so just to put a point on that.

Jake Rosenberg [07:10] – Yeah.

Ali Rowghani [07:10] – I think what you just said is 56% of Americans don’t have the ability to get loans.

Jake Rosenberg [07:21] – Right, and that 56% number is the FICO cutoff of 680 or below. Which is what banks would consider subprime.

Ali Rowghani [07:29] – So you guys are focused on that population.

Jake Rosenberg [07:32] – We’re focused on that population, and giving them safe, constructive credit products, and then tying those credit products together using incentives and education and gamification. To essentially help them improve their financial well being by incentivizing the right behaviors. We win when they win. We set the products up so that when they succeed, we do well as well.

Ali Rowghani [07:53] – Right.

Jake Rosenberg [07:54] – Going back to your original question about the mission, that was the big insight that Sasha had that really set the company up to be mission oriented, which was that we could create a product where the consumer succeeds when we succeed, and we align those incentives together, so that the consumer can go through multiple different products in the ecosystem, continue to grow. We can educate them, bring in financial services education, and incentivize the best possible behaviors to help improve their credit score and get them access to more money at lower interest rates and basically just help them improve their financial lives, and have a long-term relationship with that customer. And have a good relationship with that customer over the longterm, and create a profitable business at the same time. And by doing that, we could force a lot of the incumbents also to change the way they view this market and the way treat the market which is in many cases not constructive to the consumer’s financial wealth.

Jake Rosenberg [09:23] – With the nature of our economy moving towards a service and information-based economy. The gig economy coming up. We see a lot of significant income volatility. A huge percentage of our customers have income fluctuations of over 200 dollars a month.

Ali Rowghani [09:37] – Yeah.

Jake Rosenberg [09:39] – And that makes it really hard to budget, really hard to plan. And it actually affects a wide group of people, so it may not be the person that you might have in mind. There’s, it really affects a large group. We refer to it as the emerging middle class, because it really is a huge percentage, as I said 56%, of the U.S. We spend a lot of time actually, I personally like to spend a lot of time in our servicing center. And listening to calls.

Ali Rowghani [10:06] – Yeah.

Jake Rosenberg [10:07] – Because I feel like for me it’s personally just really inspiring. First of all. I get energized every time I go in there. It’s exciting to see the way that the customers love the product and are excited about the opportunity. When you give somebody a chance that they may not have had that other companies wouldn’t take a chance on them.

Jake Rosenberg [10:26] – The level of commitment and loyalty that it generates is just really amazing. But in addition, I like being in there because I see how our products are working, whether they’re resonating with consumers.

Ali Rowghani [10:36] – Yeah.

Jake Rosenberg [10:37] – What features we need to be building, what servicing tools we need to be building for our customer service account managers to see if we can improve their efficiency and make their job easier and better as well.

Ali Rowghani [10:50] – Right.

Jake Rosenberg [10:50] – It’s just a really great experience to go in there and hear from the customers and learn about it. But as I said, a lot of them are struggling with income volatility, and they are looking for ways to smooth out sort of their financial lives, right?

Ali Rowghani [11:05] – Yeah.

Jake Rosenberg [11:06] – And that is the common thread that we see a lot.

Ali Rowghani [11:07] – Right, terrific. You mentioned one thing that motivated you to start a company was the incredible social mission of serving an underserved population. And the second thing was the opportunity to build your own technology and do this in a different way than the traditional financial services industry did it. Can you talk about that? What have you guys built, and what’s different, in terms of the technology stack?

Jake Rosenberg [11:28] – Yeah, so we sort of approached the problem, my background as I said is, you know, distributed system web application engineer. This is actually my first foray into financial services, and I’ve had to learn a lot as I went. But we approach the problem kind of from first principles, right? How would we want the product to work, and how would all the systems that support a credit product work in real time, and could we build all that infrastructure on a modern technology stack. By doing that we’ve been able to have a bunch of firsts in terms of customer features and enabling them to use the product, so for example we were the first company that had fully algorithmic instant decisioning, where we could, someone could apply online for one of our products and instantly know whether they got approved for the product or not. We did that fully across the board. We were the first lender to roll out instant funding so that we could deploy capital to people’s bank accounts really rapidly when they needed it, which is a big deal for our customer segment. We’re trying to deal with emergencies that may arise, or again trying to smooth out their financial lives. Coming at it from first principles and building everything in real-time allows us to make sure all of the systems that we have that support those products can work in concert.

Jake Rosenberg [12:42] – And what we’ve seen is that competitors, oftentimes are, they’re buying vendor, they’re buying their technology from vendors. They think of IT as sort of an outsourced function in the business, and that gives us a huge advantage, because we have the ability to completely customize our tooling. Our efficiency as I mentioned for our account managers is much higher than our competitors. We have a fully in-house decisioning system we can tune to take advantage of new data sources, to roll out new machine learning models as quickly as possible, and in addition the data pipeline is a huge part of that. We can, we have a holistic view of how all those systems are working in real time and you know offline for analytics. One of the first times that I realized that LendUp was going to be really successful was early on when we were starting out, I had a competitor call us up and want to talk potentially about an acquisition, potentially about a partnership, and they wanted to learn about the risk-management infrastructure we had built, the real-time decisioning system. And this was a pretty big competitor doing like a billion dollars a year originations, and I was thinking, “Man, what am I going to tell these guys about risk management that they don’t already know?” We got on the phone with their chief risk officer, and the first question he asked me was, “When you make a loan to someone, how do you know they don’t already have a loan out with you?”

Ali Rowghani [14:10] – Very basic question.

Jake Rosenberg [14:10] – Yeah, I genuinely did not understand the question. I was like, we do SQL query, like.

Ali Rowghani [14:15] – Are you joking?

Jake Rosenberg [14:16] – What do you mean? But, he meant it because his customer relationship management system and his underwriting and decision management system…

Ali Rowghani [14:24] – Didn’t talk to each other.

Jake Rosenberg [14:24] – Didn’t talk to each other.

Ali Rowghani [14:26] – Yeah, yeah, yeah.

Jake Rosenberg [14:27] – And so that was the moment where I was like, “Whoa! Like, we’re going to kill these guys.” We have infrastructure that can communicate, can adapt in real time, and can really help our customer succeed in ways that they’re just not able to.

Ali Rowghani [14:40] – Right.

Jake Rosenberg [14:41] – That was a moment where I knew that we could align the mission that you were talking about before in terms of helping the customers do better with efficiencies in the business to make something that was effective and scalable, and sustainable as well.

Ali Rowghani [15:01] – It’s regulated at the, I think at the federal and state level.

Jake Rosenberg [15:04] – Yep.

Ali Rowghani [15:05] – And complicated different ways.

Jake Rosenberg [15:04] – Yep.

Ali Rowghani [15:07] – How much does that hamper your ability to kind of build what you want to build on the technology side, or what unique challenges does that create for you?

Jake Rosenberg [15:13] – Yeah, it definitely creates some unique challenges. You have to start with every product that you build, you know, compliance with all those state and federal regulation is table stakes. And we have a value at LendUp “Set the new standard,” where we say we want to go above and beyond being compliant, which is the base that you have to do to meet the requirements of the law, and set a new standard for our customers, our partners, and our regulators. But, it does, you know, there is a base level of certain statues that you must comply with, so in certain areas, and some of those statutes are written for an era of pen and paper. Or, you know, brick and mortar.

Ali Rowghani [15:54] – Right.

Jake Rosenberg [15:55] – And so some of them aren’t as relevant. What we’ve done is try to establish really good relationships with all of our regulators so that we can have real-time conversations and say, “Hey, we want to do this thing. We think it’s in line with the statute. We think it’s better for the consumers. How do you feel about that?” And create a good two-way communication so that we can try to innovate, but there’s also plenty of room for innovation within the bounds of what the statute provides. And there’s also an opportunity from a competitive advantage perspective to do the compliance better through technology. Automating a lot of the compliance validation, and automating a lot of the infrastructure that we use for reporting. We’ve been able to get some leverages against other, because the compliance affects everybody in the market.

Jake Rosenberg [16:42] – Not just us. And by using technology, we can actually view that as an advantage.

Jake Rosenberg [16:51] – Yeah, so we are 60 engineers. Roughly. And growing fast, so hiring as fast as we can.

Ali Rowghani [16:59] – Right.

Jake Rosenberg [17:00] – Yeah.

Ali Rowghani [17:01] – And what are the most interesting problems you’re working on today on the engineering side that you’re psyched about?

Jake Rosenberg [17:07] – One of the things we’re doing internally is for a long time we were moving really fast, building technology really quickly, and we’re trying to just shift the culture just a little bit towards one of craftsmanship. One of the big, the two big engineering values are really critical for a strong engineering culture are pragmatism and craftsmanship. And pragmatism is about thinking about what you build in the context of the business, and making sure that you are building things that are relevant to the business.

Jake Rosenberg [17:38] – And craftsmanship is about building things well, and building them right, and having pride in what you’re building on a regular basis, and those two things sometimes feel like they can be at odds, but I actually don’t think they are most of the time. Most of the time being pragmatic about what you choose to build and then building it really well are not in conflict. But I think we needed to, at LendUp, really think about we spent a lot of time thinking about how we could get to market quickly, how we could build the products and test things very rapidly, and we’re trying to build a more of a culture of craftsmanship within the organization, and that means shifting to every time we build something, thinking about how does it work really, really well for our customer? And that’s a change that is challenging. It happens as your organization scales, and you have more to lose, and more to think about as you scale your company, and it’s something that is really critical as we get to the next level, because our products are not, they’re not something people use casually.

Jake Rosenberg [18:41] – They affect their lives in a very real and genuine way. They have a huge impact on their daily lives, and so if they don’t work really, really well, it can have a deleterious impact on our customers.

Ali Rowghani [18:52] – Right.

Jake Rosenberg [18:53] – And as I said, when I’m in the call center, talking to customers, if something doesn’t work right, I see how it affects them on a daily basis, and so it’s become really important that we improve the craftsmanship and quality of what we do every single day, so that’s one of the cultural shifts that we’re making. In terms of the technology challenges specifically. There’s a huge machine learning pipeline that we’ve built that has to do with taking all the data that we collect on consumers, behavioral data, credit bureau data, everything else that we collect, and enabling our data science team to analyze that experiment and build really powerful decision models, models around fraud, models around risk management, and just really helping improve our ability to identify customers, the right product for the right customer at the right time. That’s a huge challenge that we’re always working on and always improving, that real-time machine learning infrastructure. One of the other big ones is how do we build a best-in-class data warehouse and data infrastructure. The data that we have is so complex. It comes from so many different sources. One of the things I’ve learned about financial services is just the amount and variance of the data is just really huge, and the reporting, similar to the way the product works

Jake Rosenberg [20:05] – and when we’re dealing with people’s money, the reporting has to be dead-on accurate.

Ali Rowghani [20:09] – Right.

Jake Rosenberg [20:10] – When I was at Zynga, and I was looking at clicks or looking behavior, as long as you were in a rough ballpark about how people were using the product, you could make decisions that were accurate about what to build next. When you’re dealing with financial and compliance reporting, every penny has to add up.

Ali Rowghani [20:24] – Right.

Jake Rosenberg [20:25] – And so really improving our data infrastructure and data pipeline is one of the big things that we’re working on as well.

Ali Rowghani [20:31] – Got it. I mean you mentioned Zynga and LendUp.

Jake Rosenberg [20:33] – Yeah.

Ali Rowghani [20:34] – On the one hand, they seem so different.

Jake Rosenberg [20:33] – Yep.

Ali Rowghani [20:37] – But, can you talk about like what you learned at Zynga that you were able to apply at LendUp?

Jake Rosenberg [20:40] – Yeah, absolutely. Well, the most obvious one is about the gamification piece, right? So we, a bunch of the things I learned about at Zynga about how you incentivize behavior in short, medium, and long-term incentives and goals, we applied to our financial products to try to help people use them as responsibly as possible. For example, we have, the way we tie our loans products together is that a consumer comes in and takes a short-term small dollar loan, and then we immediately, once they’ve been approved for that loan, and we deposit the money in their bank account, we give them the opportunity to participate in credit education, and by participating in the credit education, and by making their payments on time, they earn points which then allow them to get access to larger-dollar products at lower interest rates, and with longer terms to help stabilize them. That entire incentive structure sort of came out of the gamification stuff that I had learned at Zynga. Zynga had an incredibly data-oriented culture. All the decision making was data oriented. Mark Pincus was very much a data-driven CEO, and he culturally instilled that across the company. That’s something we’ve tried to do as well. When you’re having a conversation about what you should do next, what you should prioritize, how to think about what to build, usually someone has data, and someone may not, and the person with the data can tell the story of why something is important.

Ali Rowghani [22:03] – Yeah.

Jake Rosenberg [22:04] – Whereas the other person might just be telling their own narrative of where they think things may go. It’s always good to follow the data.

Ali Rowghani [22:17] – You guys at LendUp has a couple of credit card products on the market today.

Jake Rosenberg [22:22] – Yep.

Ali Rowghani [22:23] – And they have some really neat features that maybe haven’t gotten as much attention.

Jake Rosenberg [22:28] – Yeah.

Ali Rowghani [22:29] – As they deserve. Can you describe like the LendUp credit card product and some of the features that I think are only available on your card?

Jake Rosenberg [22:34] – Absolutely. We’re really excited about the card product. It’s the next natural step in the ecosystem that we’re trying to create, and being able to graduate people from, you know, personal installment loans onto credit cards is, revolving credit products are ideal for a lot of customers in terms of managing that income volatility that I mentioned before, so we’re really excited about that product, and we’re really starting to scale it. We’ve done some pretty cool stuff with it. First of all, we’re really thinking about it as a mobile-first product. With the loans product, the amount of interaction that you do with that product on a daily basis as a customer of that product is not that high.

Ali Rowghani [23:08] – Yeah.

Jake Rosenberg [23:08] – Because you’re coming in to maybe make an extension, make a payment, look at your balance, but it’s pretty rare. Whereas a credit card is a highly transactional product. It’s in your wallet. You’re using it on a regular basis. You need to, you know, you need alerts. You need to, it’s a real-time product, and so we’re thinking about that as a mobile-first product, and built into the mobile app we actually partnered with our credit card processor that we use for interacting with the networks, and we injected ourselves into the authorization stream that happens every time somebody makes a swipe with one of our cards, and what’s cool about that is we don’t just see the stream, so that we can do things like push notifications. Which actually has not really been offered in credit cards beyond the vertically integrated cards like AMEX and Discover. There are no MasterCards and Visa cards that actually do push notifications. You can get ’em through Apple Pay, but you cannot actually get ’em through the card issuer.

Jake Rosenberg [24:00] – Because they’re not doing, they’re not seeing that stream. We have push notifications, but not only can we see the authorizations as they happen in real time and react, but we can actually participate, so we can approve or decline transactions in real time on behalf of the customer. What that means is we are experimenting with a bunch of really interesting features that allow people to set limits for what they spend in various categories or to create fraud prevention in terms of geo fencing, or geo locations, where the card has to be within a certain distance of them or they have to be in a certain area…

Ali Rowghani [24:34] – Yeah.

Jake Rosenberg [24:35] – For it to work. Their phone has to be here for the card to work, and it has to be within the location of the card. There’s some really interesting stuff we can do there, and we’re experimenting with those features right now. We’re rolling out that app as a beta to our card customers as we sort of learn more about what’s working there.

Jake Rosenberg [24:55] – This year we’re planning, we’re hoping to open it up to open applications. But right now it’s still a beta program.

Ali Rowghani [25:03] – Got it, targeted.

Jake Rosenberg [25:05] – Yep. We’re scaling it pretty significantly, but it is still a closed beta.

Ali Rowghani [25:10] – Got it, great. So to be invited.

Jake Rosenberg [25:12] – Yep, that’s right.

Ali Rowghani [25:13] – Okay, cool.

Jake Rosenberg [25:13] – I’ll get you one, though.

Ali Rowghani [25:14] – Okay, yeah. I want one. Let me ask you, so what you’re describe at the beginning of the podcast. You’ve been in this industry a long time.

Jake Rosenberg [25:21] – Yeah.

Ali Rowghani [25:22] – You got involved when I think you were 15 and a half.

Jake Rosenberg [25:23] – Yep.

Ali Rowghani [25:24] – When your mom drove you to Yahoo for an interview. For any sort of young engineer early in his or her career listening to his podcast.

Jake Rosenberg [25:32] – Yeah.

Ali Rowghani [25:33] – What advice would you give today for someone who’s looking to enter the field and make a big impact?

Jake Rosenberg [25:36] – Yeah, that’s a great question. So the thing that comes to mind here is, you know, when I was early in my career, as I mentioned a little bit earlier, I was really focused on honing my technical craft, and really wanted to be the best possible engineer I could be on a technical level. Wanted to learn all kinds of patterns and operations and various other pieces of what it meant to be a well-rounded software engineer. I really neglected to look at the context of what the work I was doing, how it fit into the businesses that I was working in until much later in my career. It really wasn’t until late in my career at Yahoo, some of it at Zynga, and really what really pushed me was starting my own company and knowing that everything I worked on had a direct connection right to what the company was trying to do, where I really understood what it meant to fully understand how your work fits into the context of the business. What I often tell younger engineers now, some of them naturally at age 19 just have a business sense.

Jake Rosenberg [26:43] – That is amazing to see, and when that happens, great. But a lot of engineers I see early on in their career are really focused on their technical skills, and don’t look at how what they’re doing actually moves the bottom line for their business, or the top line for their business, or the mission of their business, all of which are critically important if you’re actually going to be really successful as an engineer. If you want all those things that you’re working towards in your career, like mastery and autonomy and purpose, and the ability to create and innovate, the way that you’re going to get those things is by making a big, you are, you know, if you’re working at a company, the company has a mission, it has a bottom line, it has a focus, think about how your technology moves that forward. And then start looking for the leverage points about where your technology can advance that.

Ali Rowghani [27:28] – Right.

Jake Rosenberg [27:29] – And the earlier you start thinking in that context, that sort of that pragmatism that I mentioned before in the context of the business that you’re working in, the better engineer you’re going to be, because building really beautiful tech that doesn’t advance anybody’s goals is really fun. I like messing around with home automation stuff all the time, but at the end of the day, what creates value in the long run is trying to advance the mission or enterprise that you’re involved with. That’s the biggest mistake I see young engineers make is just focusing too much on, “Am I a good software engineer? Can I code?” And not enough on, “What is my code doing in the world?”

Ali Rowghani [28:10] – Right.

Jake Rosenberg [28:12] – Whether it be the impact that it’s making for people or the impact on the bottom line of the business that I’m in.

Ali Rowghani [28:22] – I’m sure you’re a mentor now to people. Early in your career, were there important mentors for you, and would you advise young people to look for that as they get started?

Jake Rosenberg [28:31] – Yeah, absolutely. The story about mentorship that I always tell people is that when I did graduate school, it was 2001, and it was a very, very bad time in tech. It was, you know, post first dot com crash, and I had an offer from Yahoo to go work there full time, and I was graduating, it was May of 2001, I was graduating with a degree in computer science, and then I got a call from my then manager at the time, who said, “Hey, I’m going to FedEx you your offer letter, and I want, it as like Monday, he was like, I want it by, you’re going to sign it. You’re going to FedEx it back. It’s going to be on my desk by Wednesday.” And I was like, “What’s the big deal? Like, what’s going on?” And he’s like, “Just do it.” And I was like, “Okay.” I got the thing, I signed it, I FedExed it back, and then the day after he got it, and my offer was confirmed, Yahoo announced like layoffs, hiring freeze.

Jake Rosenberg [29:28] – The whole deal. I was this close, and I, because I was so focused on Yahoo and had been a part of it from early on, I wasn’t looking other places, or interviewing, or getting my resume together, and I was always a little bit of a tinkerer or builder, not an academic. My academic performance was, shall we say, spotty? And so I would have been in real, real trouble. And that moment for me was just a master class in mentorship and in management, in that he knew what was going on with every one of his people at any given time, and he made sure to think about them, to protect them, to make sure that they had what they needed to be successful. And as I continued to work for him, I saw him demonstrate that in so many different ways, and I ran into someone after years of not working with that mentor, I ran into someone who knew him, and they mentioned that he had been following everything I had been doing, that he had been talking proudly about LendUp and all this other stuff, and I hadn’t talked to him in a really long time. And it’s just, it further cemented that he was just the kind of person who just genuinely cared about the people who he worked with, and the people

Jake Rosenberg [30:40] – who worked for him.

Ali Rowghani [30:41] – Yep.

Jake Rosenberg [30:42] – I always try to model my mentorship and management on that, is really learning about the people that I’m working with, and investing in them, and knowing. I’m not naturally a networker, and someone who keeps in touch with people on a regular basis, and so it doesn’t come naturally to me, but it matters so much in the connections that you make in the long term.

Ali Rowghani [31:04] – Right.

Jake Rosenberg [31:05] – And so it’s something I’ve had to train and sort of grow in myself.

Ali Rowghani [31:08] – Right. That’s a great story.

Jake Rosenberg [31:10] – Yeah.

Ali Rowghani [31:10] – Okay, last question.

Jake Rosenberg [31:11] – Yep.

Ali Rowghani [31:13] – If we imagine the world five years from now.

Jake Rosenberg [31:15] – Yeah.

Ali Rowghani [31:16] – And think about all of the potential possibilities for LendUp…

Jake Rosenberg [31:18] – Yeah.

Ali Rowghani [31:19] – What does LendUp look like five years from now, in your vision, in your dreams?

Jake Rosenberg [31:23] – Absolutely. My dream for LendUp has always been that we create an entire ecosystem of products that are all constructive for consumers but are all designed for different use cases and different types of consumers in that realm of people who don’t have a lot of options, and we connect those all together with technology that can essentially look at an individual customer and figure out what they need to get to the next level. When they come and apply, there’s a product for them. There’s something that they can start with, that helps solve their immediate need, and then we customize a path for that person through a series of our products to help them improve their financial lives over time, and that may be credit, or it may be other things. Budgeting and financial management. There’s so many opportunities to help people manage their financial lives more effectively. Bill pay, I mean you name it, right? There’s so many things we can do, and so I want to build a whole suite of financial services. Sort of what AMEX is to the wealthy business traveler, in terms of this whole suite of services that they provide that are all cohesive and work together, I want to provide that to the half of the country that doesn’t have access to banks in a constructive way, and I want to tie it all together with machine learning that customizes a path for every single person. Every single person comes, gets a customized product, and then has a very customized path for them. This is what you do next to grow your financial well being.

Jake Rosenberg [32:49] – And then that adapts as they behave, right? If they’re succeeding it continues. If they’re struggling, then we change the way it works for them.

Ali Rowghani [32:57] – Right.

Jake Rosenberg [32:58] – As we learn more about them and how they operate. And so that’s the dream. There’s a bunch of products that we have that we’re thinking about next.

Ali Rowghani [33:05] – Yeah.

Jake Rosenberg [33:06] – In terms of continuing to build out that ecosystem, but it’s a huge, huge market. Credit cards in the U.S. is 350 billion, it depends on who you ask, but somewhere between 350 billion to 450 billion in revenues.

Ali Rowghani [33:20] – Yeah.

Jake Rosenberg [33:21] – This is not a small market, and that’s just the United States. And so we have plenty to grow in where we’re at right now, but we want to continue to innovate and add new products to the ecosystem as well.

Ali Rowghani [33:31] – Terrific. Well that’s an amazing vision. You guys have made a huge amount of progress, and we’re looking forward to seeing kind of what comes next.

Jake Rosenberg [33:37] – Me too.

Ali Rowghani [33:38] – Yeah, great to see you.

Jake Rosenberg [33:39] – Yeah.

Ali Rowghani [33:40] – Thanks for the time.

Jake Rosenberg [33:40] – Thanks, thanks for having me.

Ali Rowghani [33:41] – Awesome, thank you.

Craig Cannon [33:42] – Alright, thanks for listening. As always you can check out the transcript and a video at blog.ycombinator.com, and if you have some time, please leave us a rating and review wherever you find your podcasts. See you next time.